Ford to invest C$700 million in Ontario plant as demand surges

Solarina Ho

3 Min Read

OAKVILLE, Ontario (Reuters) - Ford Motor Co (F.N) said on Thursday it will invest C$700 million ($678 million) in its Oakville assembly plant in Canada to boost North American manufacturing capacity as demand in the region surges to pre-recession levels.

The company said the investment would increase its annual spending on Canada-made auto parts by about C$200 million to nearly C$4 billion.

Reuters reported on Wednesday that the next generation of Ford’s Edge and MKX crossover utility vehicles would be assembled at the plant.

Assembly line workers, Ford executives and union leaders gathered on the floor of the Oakville plant for a formal announcement on Thursday.

“Many people have been working a long time to make this happen,” said Joe Hinrichs, president of the Americas for Ford, adding that the investment “solidifies Ford’s commitment to Canadian manufacturing.”

Ford said it expected to secure 2,800 jobs with the expansion, which should be complete by autumn 2014. The Oakville facility employs just over 3,000 unionized workers, according to the union, but without new vehicles their jobs would have been at risk.

Ontario’s government promised a grant of up to C$70.9 million to support the expansion, while the federal government committed up to C$71.6 million from its Automotive Innovation Fund, they said in separate releases.

A relatively strong Canadian dollar has raised the cost of manufacturing in Canada, compared with the United States, prompting fears that the Detroit automakers could substantially scale back their operations in the country.

The Oakville plant currently manufactures models such as the Ford Edge, Ford Flex, Lincoln MKX and Lincoln MKT.

U.S. car sales were above expectations in August as consumers, after years of putting off purchases of new cars, took advantage of still-low interest rates and snapped up a wide range of vehicles from pickup trucks to luxury sedans.

Ford’s car sales in Canada were higher than those of Chrysler Group UAWREC.UL and General Motors Co (GM.N) in August.